SHOULD FEDERAL pensioners share in the burden of controlling the federal budget? That's an issue that Congress would like to sidestep in this election year, although the budget resolution adopted by both houses called for curtailing increases in both civilian and military pensions.
The Senate has voted by a slim margin to cap cost-of-living adjustments for federal retirees at 4 percent a year for the next three years, thereby saving $5 billion. The House, however, has rejected such a cap by a substantial majority. A House-Senate conference is trying today to resolve this considerable difference.
Congressional reluctance to limit federal pensions arises not only from due regard for the powerful civil service lobbies but from a feeling that it's not fair to take something away from federal pensioners and not from other retirees as well. Although many federal retirees also draw indexed Social Security benefits, some do not, and retirees from low-paying federal jobs may have only modest pensions.
That's all true, but it doesn't address the fact that all over the country people are enduring much harsher losses than a temporary limit on benefit increases. Jobs are being lost, welfare benefits are being cut and firms are going bankrupt. Moreover, few private sector pensioners have had the full -- excessive, really -- protection against inflation that federal retirees have enjoyed.
The fact is that both federal civilian and military pensions are considerably richer on average than other pensions. The Employee Benefit Research Institute calculates that federal pensions are almost three times larger than average private sector pension payments -- although Social Security payments narrow this difference somewhat. It is true that the better private pensions provide comparably generous benefits, but virtually none provides the full indexation of benefits and early retirement provisions that are part of federal pensions. Moreover, because of early retirement provisions, the majority of federal retirees now hold other jobs.
As a result of this generosity, spending on civil service and military pensions will exceed $37 billion next year. Although federal employees contribute 7 percent of their salaries to the retirement fund, the actual cost of their pensions is more than five times that amount. The rest must be paid for by taxes on the income of other people -- most of whom aren't getting any inflation protection at all.
The government needs to have adequate pension plans in order to recruit and retain high-quality military and civilian personnel. But the cost of currently promised benefits has already become a significant burden on taxpayers and an even larger claim on the resources of future generations. Federal pensions need a more thorough review than the budget process can provide, but for the moment it is not too much to ask that the current beneficiaries of those pensions make a small contribution to efforts to control federal spending.